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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Quanta Services Inc was -0.61. The lowest was -3.63. And the median was -2.48.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Quanta Services Inc for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 0.9518||+||0.528 * 1.0536||+||0.404 * 0.9917||+||0.892 * 0.9671||+||0.115 * 0.9999|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0104||+||4.679 * -0.0573||-||0.327 * 1.0042|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,565 Mil.|
Revenue was 2042.186 + 1792.43 + 1713.737 + 1899.272 = $7,448 Mil.
Gross Profit was 302.582 + 200.217 + 203.313 + 223.039 = $929 Mil.
Total Current Assets was $2,405 Mil.
Total Assets was $5,476 Mil.
Property, Plant and Equipment(Net PPE) was $1,166 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $631 Mil.
Total Current Liabilities was $1,246 Mil.
Long-Term Debt was $482 Mil.
Net Income was 73.742 + 16.562 + 20.496 + -5.074 = $106 Mil.
Non Operating Income was 0.752 + -1.103 + 0.081 + -0.567 = $-1 Mil.
Cash Flow from Operations was -69.335 + 66.528 + 199.739 + 223.533 = $420 Mil.
|Accounts Receivable was $1,700 Mil.
Revenue was 1939.438 + 1872.34 + 1861.386 + 2027.614 = $7,701 Mil.
Gross Profit was 235.215 + 227.505 + 237.906 + 311.628 = $1,012 Mil.
Total Current Assets was $2,363 Mil.
Total Assets was $5,373 Mil.
Property, Plant and Equipment(Net PPE) was $1,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $194 Mil.
Selling, General & Admin. Expense(SGA) was $646 Mil.
Total Current Liabilities was $1,341 Mil.
Long-Term Debt was $348 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1565.08 / 7447.625)||/||(1700.314 / 7700.778)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1012.254 / 7700.778)||/||(929.151 / 7447.625)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2405.351 + 1165.687) / 5476.468)||/||(1 - (2362.664 + 1125.501) / 5373.424)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(194.02 / (194.02 + 1125.501))||/||(200.974 / (200.974 + 1165.687))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(631.246 / 7447.625)||/||(645.957 / 7700.778)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((482.399 + 1245.908) / 5476.468)||/||((348.209 + 1340.538) / 5373.424)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(105.726 - -0.837||-||420.465)||/||5476.468|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Quanta Services Inc has a M-score of -2.80 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Quanta Services Inc Annual Data
Quanta Services Inc Quarterly Data